Tricky Ways Health Insurance Companies Cut Costs at Your Expense

My husband recently got an infuriating letter from his employer-sponsored health insurer, which covers our whole family. The insurance is conducting a dependent eligibility audit. All employees who have dependents covered by the plan must prove that the dependents really qualify.

Other than the irritation of having to track down and photocopy our marriage license, our sons’ birth certificates, and a copy of a recent tax return, this audit hardly affects our family. However, I have trouble believing that there are so many non-eligible dependents taking advantage of the insurance to make an audit necessary.

I’m cynical enough to think that this is a ploy to kick some dependent beneficiaries off the rolls because they are too disorganized or busy to send in the paperwork before the deadline.

As a matter of fact, my cynicism is well-earned. Since the implementation of the Affordable Care Act has made refusal of coverage and rescission illegal — and has put some additional financial burdens on health insurers — the insurance industry has been finding other ways to cut costs.

Generally, those cost-cutting measures don’t do much to improve the insurance industry’s reputation. Have you experienced any of these tricky cost-cutting insurance tactics?

1. Refusal to Pay

In 2014, Jeffrey Rusch discovered he had over 20 tumors in his brain, as well as a tumor in his lungs. He was diagnosed with cancer and given emergency chemotherapy — only to have his insurance company refuse to pay for his treatment, deeming it “not medically necessary”. The insurance company reversed its decision after the family appealed and went to the media with their story.

Patients have the right to appeal insurance denials, but many do not realize they have that right, or they simply don’t have the energy to fight. Insurance companies appear to use this fact to their advantage and put the onus of proving the necessity of medical care on the patient.

2. Smaller Networks

The insurance available on health exchanges through Obamacare has been designed specifically to have “narrow networks” — a shorter list of doctors and hospitals that accepts those plans. These smaller networks allow the insurers to negotiate with lower-priced medical providers, which saves everyone money.

The problems arises when top research and specialty hospitals are cut out of the network. For specific illnesses, the insurance will cover your care at such a specialty hospital, but any non-unique service you need is not covered. This means you might have to see several doctors, when under different coverage you could keep the same doctor for all of your care.

3. Tiered Drug Lists

You may have noticed that your health insurance offers incentives for choosing generic drugs. In our case, we have either a $5 copay or pay nothing for certain generics.

That is because they are at the bottom level of the tiered drug list. But the costs go up for brand-name drugs and specialized medication. In some cases, even some specialized generics are put on the top tier, and patients must pay 40 to 50 percent coinsurance for these very expensive drugs.

Considering that these drugs are often prescribed for lifelong illnesses, like multiple sclerosis, some patient advocates claim that tiered lists is another way for insurance companies to discriminate against sick people.

The Bottom Line

Insurance companies are in business to make a profit. This is a simple fact. It means they will always work to find ways to cut costs. Unfortunately, this can make it difficult for patients to afford the care they need when they need it.

Use these facts to understand what tactics your insurer is likely to use so you are not caught by surprise.

Have you experienced any of these money-saving tricks by your health insurance?

Both my wife and I suffer from chronic health issues and it has given us quite an education into the way healthcare is billed and covered (or not) by insurance. It is critical to understand your healthcare coverage and rights, and to question or appeal when needed. I often say that healthcare is one of the only things you purchase where you don’t know how much it will cost you until afterward. We have dealt with insurance companies on refusal to pay, top-tier drugs and those that are not covered at all, out of network issues, supposed “computer glitches” where claims were not approved despite being identical to previously approved claims, extra hurdles to get drugs covered that are not on the formulary, and more. Whether you do it yourself, or you hire a patient advocate, it is important to make sure you are getting all the benefits to which your policy entitles you.

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